Bruce Murphy
Murphy’s Law

Schmidt’s Pension An Issue for Deputies

Co-workers know he’s getting $1 million pension, say issue is divisive for department.

By - Aug 13th, 2018 11:24 am
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Richard Schmidt. Photo from Milwaukee County.

Richard Schmidt. Photo from Milwaukee County.

It wasn’t exactly news to Milwaukee County deputy sheriffs that Acting Sheriff Richard Schmidt is eligible to receive a $1 million lump sum pension payout, which Urban Milwaukee reported in early August.

“It’s common knowledge in the department,” says one deputy sheriff. “Everybody knows he’s getting a huge backdrop. It’s a very small number of people (within the department) who are getting the benefit.”

Schmidt, says another deputy sheriff, is “ahead of everyone else in the department” when it comes to his pension payout. Board members on the deputy sheriff’s union “talk about it all the time,” he adds. 

The sources asked to be anonymous because Schmidt is their boss and could become permanent sheriff if he wins tomorrow’s election.   

The backdrop was a lucrative pension perk that allows longtime employees to go back in time to the date they were first eligible for retirement, and collect all money they could have gotten for retiring since then, compounded by the expected interest rate earned by the county pension fund (currently 7.75 percent). Schmidt was eligible for retirement by at least 2009, and by 2022, when his first term as sheriff would end (assuming he’s elected), he could go back more than 13 years, earning a backdrop payment of at least $1 million. 

Deputy Sheriff Robert Ostrowski, who is running against Schmidt in the election, says it’s long been known that Schmidt is eligible for a huge payout. He says that employees within the department have done a rough estimate based on the acting sheriff’s years of service, and the $1 million estimate by Urban Milwaukee is “in the range” of the likely payout, should Schmidt serve until 2022.  

Ostrowski argues that the acting sheriff should sign a waiver of the backdrop benefit. “I think if he really wants to serve the community, he should sign a waiver,” Ostrowski says. “To me, it’s upsetting both as a county employee and a taxpayer to see someone get this kind of payment.”

Ostrowski’s campaign sent a request to the Milwaukee County Department of Human Resources requesting information on the exact value of the backdrop for Schmidt if he retired at the end of 2018 and at the end of 2022, but the department wrote back that under the state Open Records Law, governments are only required to share existing records. The law “does not require an authority to create a new record by extracting information from existing records and compiling the information in a new format,” the department’s response noted. 

This means the department has done no estimate of Schmidt’s likely backdrop — which in turn means that County Executive Chris Abele never checked on whether the candidate his political action committee is spending $300.000 to elect will be getting a huge backdrop.

Abele has been a frequent critic of the backdrop benefit and its destructive impact on county finances. It has already cost taxpayers some $300 million and is projected to cost another $100 million or more before the remaining 1,000 or so county employees still eligible for the backdrop retire. 

So how can Abele support Schmidt for sheriff? Urban Milwaukee contacted Abele’s office with questions: whether Abele asked Schmidt what kind of backdrop he was eligible for before endorsing him for sheriff and whether Abele thought Schimdt should sign a waiver of the benefit if he is to earn our vote as sheriff. Abele’s spokesperson Karina Henderson responded, saying Abele “doesn’t have a comment” on these questions. 

Ostrowski says the issue of Schmidt’s pension is likely to fester within the department and will make it harder for Schmidt to manage his employees. Deputy sheriffs contacted by Urban Milwaukee agreed, noting that members of their union are not eligible for the backdrop and only managers or “command level staff” who are not represented by the union are eligible. Schmidt became eligible as he rose through the ranks into a command level position.  

“It’s a concern for everyone in the department because it actually costs deputy sheriffs more to help cover the backdrop to keep the pension fund solvent,” says one union member. 

And the employees’ contributions to their pension have gone up under Abele, as the county executive has taken actions to improve the county’s troubled fiscal outlook. 

The difference in pensions between average department members and the few veterans like Schmidt is massive. Ostrowski notes he will be eligible for retirement in four years and will be eligible at that point for a $28,000 annual pension. By contrast, Schmidt could collect the $1 million backdrop, plus a lifetime annual payment of $44,550 per year. Plus lifetime health insurance, another benefit given to older employees and since eliminated. 

In short, most of the employees Schmidt would be overseeing as sheriff will resent the fact they must subsidize a supervisor looking to became a millionaire. They are also likely to resent the county executive for making them pay more to help subsidize their wealthy boss. 

“Basically we all think this is a scam to give a small number of people a lot of money,” a deputy sheriff says. “And it hurts the (sheriffs”) agency and it hurts the county and the taxpayers.” 

When questioned by Urban Milwaukee Schmidt refused to say whether he would sign a waiver of his lucrative backdrop benefit, saying only that he has no intention of ever retiring. But Schmidt has the option of using the “survivor’s benefit”, Ostrowski notes, and could designate that his spouse could collect up to 100 percent of the benefit. Calls to Schmidt as to how he intends to handle this were not returned. 

The Milwaukee Journal Sentinel was asleep back when the infamous 2000 and 2001 pension plan was adopted by the county, and is asleep again on Schmidt’s pension payout. The only coverage of the issue it has offered is one sentence in a story by reporter Dan Bice about Abele’s spending to elect Schmidt, where Bice noted the acting sheriff will collect “at least a six-figure backdrop.” Bice, however, offered no evidence for this assertion and in making this claim lowered Schmidt’s backdrop to as little as $100,000. I contacted Bice to ask where this information came from and have yet to hear back. 

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More about the Milwaukee County Pension Scandal

Categories: Murphy's Law, Politics

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